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Wrangler West Reports 2008 Operating and Financial Results

CALGARY, April 9 /CNW/ - Wrangler West Energy Corp. ("Wrangler West")
(TSX-V "WX") announces today's filing on www.sedar.com of the Corporation's
audited Financial Statements and related Management's Discussion and Analysis
("MD&amp;A") for the year ended December 31, 2008.
HIGHLIGHTS
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Year ended December 31 2008 2007 % Change
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OPERATIONAL HIGHLIGHTS
Production
Crude oil and NGL (bbls/d) 339 369 (8)
Natural gas (mcf/d) 6,332 7,801 (19)
Total (boe/d) 1,394 1,669 (16)
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Prices
Crude oil and NGL ($/bbl) 87.64 62.08 41
Natural gas ($/mcf) 8.87 7.09 25
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Per boe ($)
Petroleum and natural gas revenue(1) 61.58 46.84 31
Loss on commodity price contracts (2.52) - -
Royalties (12.74) (9.90) 29
Operating expenses (14.12) (10.27) 37
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Field netbacks 32.19 26.67 21
General and administrative (2.83) (2.34) 21
Interest (1.06) (0.85) 25
Current income tax (2.94) (1.36) 116
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Funds flow from operations 25.36 22.12 15
Depletion, depreciation and accretion (24.52) (20.54) 19
Stock-based compensation (0.56) (1.11) (50)
Future income tax - recovery 1.42 1.05 35
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Net earnings 1.13 1.52 (12)
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FINANCIAL HIGHLIGHTS ($ thousand)
Petroleum and natural gas revenue(1) 31,422 28,536 10
Loss on commodity price contracts (1,287) - -
Royalties (6,500) (6,034) 8
Operating expenses (7,208) (6,259) 15
General and administrative (1,442) (1,424) 1
Interest (542) (519) 4
Current income tax (1,500) (830) 81
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Funds flow from operations 12,944 13,471 (4)
Depletion, depreciation and accretion (12,514) (12,515) -
Stock-based compensation (287) (674) (57)
Future income tax - recovery 725 639 14
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Net earnings 868 920 (6)
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Outstanding shares (thousand)
Weighted average - basic 6,377 6,361 -
Weighted average - diluted 6,783 6,963 (3)
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Funds flow from operations -
basic ($/share) 2.03 2.12 (4)
Funds flow from operations -
diluted ($/share) 1.91 1.93 (1)
Earnings - basic ($/share) 0.14 0.14 -
Earnings - diluted ($/share) 0.13 0.13 -
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Total assets ($ thousand) 46,639 49,150 (5)
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(1) In 2008, petroleum and natural gas revenue is before realized loss on
commodity price contracts.
Wrangler West converts petroleum and natural gas reserves and volumes to
a common unit of measure on a basis of six thousand cubic feet ("mcf") of
natural gas equals one barrel ("bbl") of oil. Disclosure using barrels of
oil equivalent ("boe") may be misleading, particularly if used in
isolation. The basis for the boe conversion ratio of 6 mcf equals one bbl
is an energy equivalency conversion method, primarily applicable at the
burner tip. This conversion rate does not represent a value equivalency
at the wellhead. The Company calculates boe per day based on total
production for the period divided by the number of days during the
period.
Review of 2008
In 2008, Wrangler West achieved total revenue of $31.4 million and $12.9
million in funds flow from operations, produced 1,394 barrels of oil
equivalent (boe) per day and directed $10.4 million in capital expenditures
primarily to upgrade facilities and optimize production. Wrangler West's
production is 75 percent natural gas and the Riviere properties produce 76
percent of total daily production. In the last half of 2008, we reduced
budgeted annual capital expenditures by approximately 30 percent to respond to
economic uncertainty and deteriorating commodity prices.
Wrangler West navigated through 2008 by addressing many different
challenges. High commodity prices throughout the first half of the year
spurred industry exploration activity to record levels and heightened
competition for access to land, services and equipment. In 2008, Wrangler West
delivered strong funds flow from operations due to strong commodity prices
which offset the 16 percent drop in daily production year over year. Although
Wrangler West captured most of the benefit from the 2008 strength in oil and
natural gas prices, commodity price contracts in place from April until
October limited some of the upside.
Wrangler West drilled only three wells in 2008, resulting in one natural
gas well and two dry and abandoned wells. We directed most of the capital
budget toward infrastructure and facilities to improve production performance.
Exploitation of the Riviere Wabamun A oil pool continues to challenge us.
Recompletion operations, including fracturing and acidizing the horizontal
legs of the producing zone, did not achieve the anticipated results. We
decided to suspend the horizontal well stimulation project until commodity
prices improve and we are satisfied with our technical approach.
Wrangler West's 2008 operational activities resulted in an increase of
290 mboe (proved plus probable) to our reserves base. Reserves, as evaluated
by Sproule Associates Limited effective December 31, 2008, are 1.7 mboe in the
proved category and 2.9 mboe in the proved plus probable category, resulting
in a net present value of $59 million, discounted at 10 percent.
Remaining Reserves Net Present Values
Before Income Taxes
Company ($ thousand)
Gross(1) Gross(2) Net(3) at 0% at 5% at 10% at 15%
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Grand total
(mboe)
Proved
developed
producing 1,471.5 1,343.9 1,114.9 31,009 27,959 25,446 23,357
Proved
developed
non-
producing 284.2 210.5 174.6 8,872 7,027 5,684 4,680
Proved
undeveloped 174.0 174.0 143.9 3,980 3,155 2,507 1,990
Total
proved 1,929.8 1,728.3 1,433.5 43,860 38,142 33,636 30,027
Total
probable 1,322.3 1,198.4 993.7 45,919 33,520 25,545 20,155
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Total
proved
plus
probable 3,252.0 2,926.8 2,427.2 89,780 71,662 59,181 50,181
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(1) Gross reserves are the remaining reserves attributable to the
property.
(2) Company gross reserves are the Company's working interest share of
the remaining reserves attributable to the property, before deduction
of any royalties.
(3) Company Net Reserves are the gross remaining reserves of the property
in which the Company has an interest, less all crown, freehold, and
overriding royalties and interests owned by others.
2009 Wrangler West Outlook
Following the strong commodity prices during the first half of 2008,
Wrangler West is prepared for the next phase of the oil and natural gas
business cycle which we expect will be characterised by soft commodity prices.
Currently, Wrangler West has no production hedged and is fully exposed to
weaker oil and natural gas prices. We have reviewed our inventory of projects
and remain committed only to those that can add value in a weaker price
environment. We are expanding our drilling inventory by purchasing land at
lower cost and by creating new prospects. Where possible, we will work with
industry partners to capture opportunities to acquire lands and petroleum and
natural gas rights and be ready to act when commodity prices strengthen.
Forward Looking Statements
This news release contains certain forward-looking statements and
forward-looking information (collectively, "forward-looking statements")
within the meaning of Canadian securities laws. These statements may relate to
management's outlook, anticipated events or expected results and may include
statements regarding Wrangler West's future financial position and business
strategy; projected costs; capital expenditures; financial and operating
results; taxes, tax horizons and tax treatment; plans and objectives involving
financing; commodity prices; number, type, timing and tie-in of wells drilled
or recompleted; commencement and costs of production; and the magnitude of
crude oil and natural gas reserves.
Statements relating to "reserves" are deemed forward-looking statements,
as they involve the implied assessment, based on certain estimates and
assumptions that the reserves described can be profitably produced in the
future. In some cases, readers can identify forward-looking statements by
terms such as "may", "will", "should", "expect", "plan", "anticipate",
"believe", "intend", "estimate", "predict", "potential", "continue" or other
similar expressions concerning matters that are not historical facts.
Management bases forward-looking statements on certain factors and
assumptions regarding: future corporate growth; results of operations; supply
and demand for commodities, their prices and volatility; royalty rates or
related incentives; performance of properties; business prospects and other
opportunities. Specifically, in projecting future activities, certain
assumptions are made about Wrangler West's ability to find and develop
economic crude oil and natural gas reserves; production of discovered
reserves; costs of material and services; access and timing of access to
production facilities and transportation; access to and retention of qualified
and experienced staff; and changes in government regulations. While management
considers these assumptions reasonable, based on information currently
available, they may prove to be incorrect. By their nature, forward-looking
statements are subject to numerous risks and uncertainties that could
significantly affect anticipated results in the future and, accordingly,
actual results may differ materially from those predicted. Wrangler West's
business risks arise from uncertainties involving, but not limited to: crude
oil and natural gas commodity prices; interest and currency exchange rates;
environmental and safety issues; surface access timing and costs; and
financial and liquidity considerations. Additional risk arises from, among
others, the production performance of existing properties, changes in
regulatory standards and uncertain results from capital expenditure programs.
Financial outlook information contained in this news release about
prospective results of operations, financial position or cash flows is based
on assumptions about future events, including economic conditions and proposed
courses of action, from management's assessment of relevant information
currently available. Readers are cautioned that a) such financial outlook
information contained in this news release should not be used for purposes
other than for which it is disclosed herein; and b) the list of risk factors
cited is not exhaustive.
Assumptions used in the preparation of such information, although
considered reasonable at the time of preparation, may prove to be imprecise
and, as such, readers should not rely unduly on forward-looking statements or
financial outlooks. Wrangler West provides this news release as of April 9,
2009 for the purpose of reporting financial and operational results for the
three and twelve months ended December 31, 2008. Wrangler West disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, other than
as required under securities laws.
Corporate Profile
Wrangler West is a Canadian junior oil and natural gas producer which has
been building production and assets through exploration in Alberta. Since
inception, our mandate has been to use the drill bit to add shareholder value.
Disciplined management of our operations and production portfolio has created
sufficient funds flow to support ongoing operations. Wrangler West will
continue to reinvest funds flow from operations and other available capital to
protect and add future value. Wrangler West trades on the TSX Venture Exchange
under the symbol "WX".
Additional Information
Additional shareholder and public information relating to Wrangler West
Energy Corp. is filed on SEDAR and accessible at www.sedar.com. This includes
the Statement of Reserves Data and Other Oil and Gas Information Form NI
51-101 F1, F2 and F3 effective December 31, 2008 as well as the Notice of
Annual Meeting of Shareholders, the 2009 Management Information Circular, the
Form of Proxy in preparation for Wrangler West's Annual Meeting scheduled for
May 13, 2009 in Calgary.
The TSX Venture Exchange has not reviewed, and does not accept
responsibility for, the adequacy or accuracy of this press release.